St. Jude CEO Responds to Critics During Piper Jaffray Conference

By Johanna Bennett

St. Jude Medical (STJ) CEO Daniel Starks is hitting back today at critics, according to reports from DJ Newswires. Speaking at the Piper Jaffray investor conference in New York City, Starks told audience members that there’s no “special risk” to the company’s Durata heart lead product being yanked off the market. An inspection report released last week by the FDA raised concerns about Durata’s manufacturing quality controls. And on Monday, Citibank upgraded rival Boston Scientific (BSX) to Buy from Neutral, predicting that the Durata will be recalled in the next six months and Boston would gain sales.

Starks’s remarks sent St. Jude’s stock price rising a bit in morning market action. But at nearly $32 a share, it has fallen roughly 29% off its 52-week high in late March amid growing safety worries and increasing criticism from analysts.

In May, Barrons.com wrote bullishly about St. Jude, predicting that safety worries would be put to rest this year and other overlooked parts of the company would make up for the slowing market for implantable defibrillators. Since then, the stock has fallen 16%.

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NOVEMBER 27, 2012 2:35 P.M.

Anonymous wrote:

My 93-year-old mother's life was devastated a year ago by the failure of a St. Jude lead. The federal doctrine of pre-emption protects medical device makers from any liability when their products injure, disable or kill patients.
Millions of cardiac devices have been implanted in the U.S. during the past 20 years. More than 750,000 people currently have a defibrillator -- which can emit up to 1,700 volts of electricity -- and nearly a million have a pacemaker. The $10 billion heart-device industry -- dominated by Medtronic, St. Jude and Guidant (now known as Boston Scientific) -- sells millions of its products around the world every year. To be fair, countless lives are prolonged as a result.

But do patients give their informed consent to have a dangerous appliance implanted in their chests, and to absolve the manufacturer of all responsibility if the device damages them? I don't think so.

About half the people I know who are retirement age or older have a pacemaker or defibrillator. None of them had ever heard of the "doctrine of preemption" -- which blithely lets manufacturers off the hook if the device harms them -- until I told them about it. The three cardiologists I called to get their opinion of preemption had never heard of it either, and the editors of the nation's two top cardiology journals declined to take a stand. This is mind-boggling. It certainly makes one wonder if their loyalty is to patients or to device-makers.

TAKE ANOTHER LITTLE PIECE OF MY HEART

What makes the situation particularly galling is the growing evidence that "a vast majority of people who get cardiac implants never need them," according to the New York Times. It is one more aspect of the health-care system that is designed to enrich corporations and doctors rather than helping patients.

(Three years before her collapse in the kitchen, my mother, who had never had heart trouble -- or any health trouble, and didn't even have a primary care doctor -- went to an emergency room after having fainted. She had fainted three other times in the past 20 years, each time from dehydration. Despite that medical history, and the likelihood that dehydration was the culprit once again, she was rushed into surgery to implant a pacemaker. When she made an appointment, as directed, to see a cardiologist the following week, he said, "I see no evidence whatsoever that you need a pacemaker.")

The manufacturer of my mother's pacemaker denies that its device or the "lead" (the wire that attaches the pacemaker to the heart) malfunctioned. But after she was admitted to the hospital, and before her problem had been diagnosed, her condition was monitored via telemetry, and she experienced one brutal wave of vertigo and nausea after another, which clearly registered on the monitors. It was horrifying to see her subjected to these onslaughts -- spasms, moans and flailing about -- during which she felt she was dying. This was not her heart malfunctioning and violently attacking her. Her heart is and always has been fine. She has no heart disease. She had a flawed pacemaker, which was removed hours later.)

Some patients are reassured to see the pacemaker. My mother hates it.

More and more people are being sliced open and wired up to these devices, even as improved treatment of cardiac disease with drugs, diet and behavioral changes is reducing the need for them.

Since 85 percent of those who use pacemakers and defibrillators are over 65, Medicare and Medicaid spend billions of our tax dollars to implant the devices, and then -- since the manufacturers aren't liable -- they spend billions more on hospitals, surgeries and rehab when the devices malfunction. (Medicare paid more than $75,000 for my mother's second surgery and so-called rehab after having paid about $45,000 for the initial implantation and $20,000 for the pacemaker.)

Why should taxpayers foot the bill when hugely profitable corporations screw up? The patients themselves -- the victims of malpractice -- are liable for tens of millions of dollars in expenses not covered by Medicare.

The pacemaker and its leads are clearly visible in a chest X-ray.

FEELING DISHEARTENED YET?

How can these multinational conglomerates possibly be free of liability when their incompetence or negligence devastate -- or even terminate -- patients' lives? If you find it hard to believe, join the club.

The lawyers and health-care analysts I interviewed about the policy of "federal preemption" agree that it is an outrage, even by Washington, D.C., standards, where money can buy you pretty much anything.

An FDA official admitted to Sen. Charles E. Grassley (R-Iowa) that, "There's a lot of stuff going on under the table."

"How can Americans rest easy about the safety of these life-saving products?" Grassley asked.

Senator Grassley expressed disgust over the lack of accountability.

The FDA's device review system got a lot of unwanted attention in the fall of 2010 after a group of scientists complained that the agency pressured them to approve medical devices despite their own reservations about the health risks. In an open letter to President Barack Obama, the scientists called for "sweeping measures" to end "the systemic corruption and wrongdoing that permeates all levels of the FDA."

Just last week, it was revealed that the FDA put under sweeping surveillance five dissident scientists who had been expressing their concerns about the FDA device-approval process to Congress, the media, the president's office and their attorneys.

"What began as a narrow investigation into the possible leaking of confidential agency information by five scientists quickly grew in mid-2010 into a much broader campaign to counter outside critics of the agency’s medical review process, according to the cache of more than 80,000 pages of computer documents generated by the surveillance effort," the New York Times reported. A sort of "enemies list" was compiled, the Times added.

The scientists reportedly intend to sue the FDA on their own behalf. But who will sue on behalf of the public over the chummy, corrupt relationship between Congress, the FDA and device makers?

BRACED FOR REFORM

The device makers know they have a ridiculously sweet deal -- no accountability! -- and they know it can't last.

Much to my surprise, a senior executive at one of the top three cardiac device-makers in the country acknowledged to me, off the record, that the industry is dreading, but expecting, eventual reform.

"When Obama won, we thought, 'Boy, it's over for us now.' We were sure he'd get preemption overturned. We thought everything would change. But nothing has changed. In fact, we're under less scrutiny than ever," he said.

Even Consumer Reports felt compelled to weigh in on this disgraceful state of affairs in March, 2012, according to LegalExaminer.com: "The doctrine of federal preemption has got to go," it stated. "Patient safety is truly at risk until it is eliminated."

I contacted the public-affairs offices of the top three cardiac device-makers in the country asking for their position on preemption. I explained that I was making an honest attempt to understand their point of view. I wasn't prepared to demonize them -- I assume they are decent people who believe in what they are doing. But all of them -- Medtronic, St. Jude and Guidant -- declined to comment, without explanation. According to industry journal Mass Device, it is an "explosive" issue.

The industry had been braced for preemption to be rescinded in the massive health-care overhaul, but it was left intact. Obama did attempt to impose a small excise tax on medical devices, to help fund health-care reform, but the manufacturers had such a fit, with the help of their D.C. lobbying powerhouse, AdvaMed, that the House of Representatives struck it down on June 7, 2012. The industry claimed the tax would be a "job killer," would "stifle innovation," putting the U.S. at a global disadvantage, and would put dynamic, young, smaller firms out of business.

"It's unprecedented to tax a company that's not yet profitable, and 70 percent of device makers aren't yet profitable," one business owner, Michael Minogue, told Chris Arnold on NPR's "Morning Edition" on July 3. He said a 2 percent tax on his firm, AbvioMed, would be $4 million, about 15 percent of what it pays for research & development and more than it pays pay for employee health care. Minogue says his company is just becoming profitable, so that's more than his entire profit for this year.

BIG HEART ATTACKS OVER A LITTLE TAX

Notwithstanding the industry's tantrum, the excise tax was upheld as part of the U.S. Supreme Court’s affirmative ruling June 29 on the health-care law.

Despite its stratospheric profits, and despite the fact that it is outsourcing thousands of jobs to get even richer, and despite the fact that American taxpayers shell out billions of dollars in assuming responsibility for its product defects, the industry is still griping about "giving back" a paltry 2.3 percent gratuity -- in the form of what is essentially a sales tax that they can pass along to their customers, according to economists such as Paul Van de Water -- and some are still plotting ways to get the tax removed.

On June 26, Congress passed a measure that will collect increased fees for the FDA from device and drug makers in exchange for an expedited approval process.
That's all we need -- more speed. A previous increase in user fees for approval of new drugs cut the pre-market time nearly in half. Major recalls and reports of serious adverse events among patients don't speak well for devoting less time to safety and effectiveness considerations.

The new Congressional measure also permits those with clear conflicts of interest to participate in the approval process, according to critics. Public Ci

NOVEMBER 27, 2012 8:00 P.M.

Jugdish wrote:

Interesting Rant from "Anonymous." While there is always overuse in the system, when it comes to pacemakers it's pretty clear cut for a majority of people: If your heart rate is 20 and you feel like crap, you need one. ICD's are a bit more complicated, but if I was at risk of sudden death, I'd would weigh the risk of a broken wire over death and get the device. It's easy to play Monday morning quarterback when you have a chip on your shoulder.

My issue is with the way St. Jude has handled the entire Riata/Durata lead problem. There is no doubt in my mind that Durata will eventually have the same insulation problems as Riata and Mr. Starks is in complete "nothing to see here" mode. Take responsibility and create a plan to deal with the issue rather than sweeping it under the rug. Perhaps Mr.. Starks didn't learn anything from the days of Guidant.

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